This week, a federal judge sitting in Camden refused to dismiss a federal class action lawsuit involving the interplay of veteran’s and Medicaid benefits. This means the case will proceed. If the plaintiffs in this case prevail, this case could be a big win for many individuals seeking Medicaid benefits.
Medicaid is a health insurance program for needy individuals. In order to qualify for Medicaid, an individual must have a limited amount of assets and income that is insufficient to pay for the cost of his care.
Unlike most health insurance programs, Medicaid will pay for long-term care services, such as nursing home care, care in an assisted living residence, and long-term care at home (for instance, a home health aide). Since long-term care can be very expensive, many people who never dreamed that they would need to qualify for Medicaid benefits find themselves wanting these benefits if they require long-term care.
When an individual needs Medicaid long-term care services in the “community,” such as care at home or in an assisted living residence, the Medicaid program in New Jersey imposes an income cap on the Medicaid beneficiary’s income. For 2014, a Medicaid beneficiary seeking services at home or in an assisted living residence must have no more than $2,163 per month in gross income. If his gross income exceeds $2,163 per month by even one penny, he will not qualify for long-term care Medicaid benefits at home or in an assisted living residence.
While the Medicaid program is, by far, the most valuable program for which an individual requiring long-term care can benefit, there are other programs that can benefit such individuals. One of those programs is a Veterans Administration benefit known as Aid and Attendance (A&A).
A&A is a needs-based cash assistance benefit. It will provide a maximum monthly benefit of approximately $2,100 to a veteran and approximately $1,100 to the widow of a veteran. The beneficiary must have limited asset and income that is insufficient to meet his care needs.
A problem can arise for those individuals receiving A&A when they seek to qualify for Medicaid benefits at home or in an assisted living residence. This problem is best illustrated with an example. Assume that Mr. Smith has Social Security income of $1,000 per month and a pension of $500 per month. Assume further that Mr. Smith is residing in an assisted living resident that costs $6,500 per month.
When Mr. Smith first entered the assisted living residence, he had $72,000 in assets. The assisted living residence informed him that he must pay privately for his care for two years before the facility would allow him to qualify for Medicaid benefits, which would then pay for his care at the facility. (The two-year timeframe is a typical requirement of assisted living residences in this area.)
Mr. Smith applies for A&A and begins receiving $2,000 per month. Now, his income is $3,500 per month ($1,000 + $500 + $2,000 = $3,500) and his deficit with the facility (the difference between the monthly charge and his income) is only $3,000 ($6,500 – $3,500 = $3,000). So, Mr. Smith’s $72,000 is sufficient to pay for his care for two years ($72,000/$3,000 = 24).
The problem arises when the two years are up and Mr. Smith needs to qualify for Medicaid benefits. His income is now $3,500 with the A&A and the Medicaid income cap is $2,163.
The federal lawsuit is to enforce a Medicaid rule that says A&A should not be treated as income in cases such as Mr. Smith. The Medicaid Office is refusing to honor this rule. The plaintiffs are suing to compel Medicaid to recognize its own rule. Personally, I think they will win; I’ll keep you posted.